Think of it like cash but only on your phone, a cryptocurrency that's issued by the People's Bank of China and backed by the renminbi.

A new global currency.

After Facebook announced the launch of its own cryptocurrency, the central bank accelerated its work.

China is already well on its way to becoming a cashless society.

Over 600 million Chinese, almost half the country, already use apps such as Alibaba's Alipay and Tencent's WeChat to pay for everything from groceries to bike rentals.

Today, the two companies handle close to 90% of China's third-party mobile payments market.

The central bank's currency will provide a new payment tool to substitute cash.

Unlike Alipay or WeChat, users won't be limited to paying within one platform.

China plans for its crypto to be accepted by any individual or institution, just like banknotes and coins.

If Beijing's plan materialize, China could become the first major nation to go completely cash-free, and that could reverberate across the global financial system.

If it succeeds, I would expect that a large number of other countries will want to emulate their success.

There is still little known about how the system, known as Digital Currency Electronic Payments or DCEP will operate and what it will look like.

So, we examined official statements and documents to understand why China is pushing hard into this crypto future.

This is Mu Changchun.

He oversees the central bank's digital currency efforts and is the country's most outspoken authority on the roll-out.

Since August, he has given a number of speeches on China's digital yuan, and even launched an online course about Facebook's Libra on a popular Chinese education app.

Facebook's plans to provide its two billion users with a brand-new digital currency spooked central banks around the world, including China's.

They see that Libra could be a way of extending American financial hegemony into the digital currency space as well, say, helping to implement sanctions and export controls.

Beijing historically sought decentralized digital currencies like Bitcoin as a threat to a long-standing pillar of its monetary policy: capital control.

But then in October, Chinese president Xi Jinping spoke about the important role of blockchain, endorsing the government's embrace of the technology that powers cryptocurrencies.

They're looking at this and saying, is there some element of it that we'd like.

And actually, what they found is that blockchain is an excellent technology for tracking.

That could give an unprecedented level of power for any central bank in the world over capital movements.

Officials say the digital currency will not challenge Alipay and WeChat, but it would have some similarities.

Like WeChat and Alipay, it will need a digital wallet.

But unlike the paying platforms, it won't require a bank account.

Instead, commercial banks will issue the digital wallets.

A unique aspect of China's crypto will be that payments can be conducted offline.

So, in case of a natural disaster when the network is down or if you're on board a plane, you can still pay as long as your phone has power.

And authorities promise a major difference will be greater anonymity, but it won't be absolute anonymity.

This patent filed by the central bank in 2017 shows that it's researched ways to track digital cash.

Marketers won't know what people spend their money on, but that information will still be visible to the central bank to a certain extent.

One of the most interesting aspects of the system is how much data will the central bank have about where things go because that's one of the largest, most important differences between digital currency and cash.

The central bank calls this controllable anonymity and says big data can help identify certain behavioral characteristics.

Officials say tracking transactions will help battle money laundering, tax evasion, and terrorist financing, which is harder to do with cash transactions.

And while the central bank says it won't spy on citizen's everyday transactions, experts are worried that China's cryptocurrency will allow greater state surveillance.

China's central bank is not the only one pursuing a digital state-backed currency, but it is likely to be the first major one to launch it.

Beyond replacing cash, this could internationalize the renminbi, and experts think possibly create less dependency on the U.S. dollar.

There's still a long way before that happens.

Though most governments are still wary about crypto, the world will be watching China's experiment closely.